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Special Report
The Pilgrims' Financial Crisis
A Thanksgiving lesson in economic survival and progress.
(Page 2 of 2)
Fortunately, the renowned and practical adventurer Captain John Smith was elected President of the colony in 1608. His focus was survival for the colony and its settlers, rather than quick riches. He established extensive relations with the surrounding Indian population to gain a quick source of food. This led to his celebrated romance with the Indian princess Pocahontas.
Then, to deal with his non-working aristocrats, Smith adopted as Colony policy the principle of "He who does not work does not eat." With the resulting newfound incentives, colony productivity and output soared, along with the survival rate among the settlers, which climbed to over 90%. This brings to mind the workfare Reagan sought to establish in California and Washington, which saw fruition in the welfare reforms the Congressional Republican majorities adopted under Speaker Newt Gingrich in 1996.
This new capitalist policy solved the financial crisis of Jamestown as well. By 1613, enterprising colonist John Rolfe, who later married Pocahontas, introduced tobacco farming. This proved to be "black gold" for the colony, with a lucrative market for the crop quickly developing in Europe, which led to an explosion of prosperity in Virginia. Waves of new settlers flowed in here as well, seeking again the new American dream of prosperity and freedom. In his later writing promoting settlement of the New World, Smith wrote, "Here every man may be master and owner of his owne labor and land….If he have nothing but his hands, he may…by industrie quickly grow rich."
TODAY, WE KNOW as well how to solve our own financial crisis and restore American prosperity. Besides the experience of the early colonists, we have the more direct recent experience of the historic Reagan economic boom. If we cut tax rates for workers, corporations, investors and entrepreneurs, we increase the reward and consequently the incentive for productive activity, as in Plymouth and in Jamestown. If we reduce unnecessary regulatory burdens, then we reduce costs on the economy, and so also increase the reward for pro-growth engagements. Removing regulations in particular that prevent production of oil, gas, and nuclear power would provide a reliable supply of low cost energy also stimulating economic growth. We also need stricter anti-inflation monetary policies for the Fed, whose loose monetary policies in recent years was the fundamental cause of the housing bubble, that lies at the root of the meltdown of major financial institutions we are suffering now. Reduced government spending burdens also reduces unnecessary costs for the economy. Free trade further promotes prosperity for all.
This is all simple, direct, undeniable logic, proven by thousands of years of human economic experience. The bigger problem for America now is not the financial crisis, but that our political fashion is stuck on stupid, wanting to take us in exactly the opposite direction of where we need to go to restore our prosperity. Instead of Reaganomics, our new political leaders want to pursue Hugo Chavez economics. Their badly misled followers are lost in a soft-headed dreamworld. But their leaders know where they are going. What they are after is not maximum prosperity for all, but voter dependency to cement their political power.
The American people will eventually figure this out, rediscover the timeless principles of human economics, and reject the comparative poverty of government redistribution in favor of the traditional American prosperity and freedom established by our nation's founders. The real question is how much the America people will have to suffer until that happens.
About the Author
Peter Ferrara is Senior Fellow at the Carleson Center for Public Policy, Director of Entitlement and Budget Policy for the Heartland Institute, and General Counsel of the American Civil Rights Union. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under the first President Bush. He is the author of America’s Ticking Bankruptcy Bomb, now available from HarperCollins.
Letter to the Editor View all comments (57) | Leave a comment
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Jason| 11.26.08 @ 6:27AM
I hope we don't have to suffer with this socialist nonsense for long, but what society has ever recovered from socialism?
http://rightklik.blogspot.com/
Agent Orange Peel| 11.26.08 @ 6:35AM
TODAY, WE KNOW as well how to solve our own financial crisis and restore American prosperity.
Who is "WE"? "WE" certainly aren't the politicians in Washington. The politicians for the last eight years that is (mostly Republicans) and probably the ones for the next eight years (mostly Democrats).
Daphne Kenward| 11.26.08 @ 8:19AM
Hold on a minute here, over the past eight year's America was blessed with guess what, low taxes. So if low taxes creates better economic wealth, and growth what happend?.
I think someone out there has ignored the little problem called greed, the more people have it's the more they want.
If people want oil to drive gas gusselers, what does the masses think the government use to pay for it if no one is paying any taxes, under the low tax system?. You want war, where does the government gets the money from to pay for war. Where does the government gets the money from to buy and invest in America war machines, where does the government get's the money from to pay the people who fight in these wars?. Where does the money come from to pay for treatment for the people who become crippled in wars?. How do you pay for bridges, roads, education?. The list could go on and on and on. Are you sure you want to be safe? if so you need a Police force, who pays their wages, have a guess, it comes out of taxes.
GV Berlichingen| 11.26.08 @ 9:25AM
Along with D.K., I too want to see improvements in the American military, veterans welfare, infrasturcture, and education. I hope that is where the libs will focus future tax revenues. More basics Mr. President! Less change!
Speedbump| 11.26.08 @ 10:13AM
Daphne, what happened was Socialism...the nonsense of forcing the banking industry to make loans to parties who could not afford them, and the government then rewarding the banks for doing so caused the financial industry to make a run for the bottom...the Democrat party then saw an opportunity for their October Surprise, and pulled the rug out, thus tanking the economy...
As far as taxes go, I suggest you re-read the article above until you fully understand the fact that government is a short circuit on productivity; lower taxes lead to more prosperity, and thus more revenue to the government, because actual wealth is created by free people acting on resources...everytime money changes hands in the private sector, wealth is created...government cannot create wealth, and the only way it can create jobs is to keep more money in the private sector through low marginal tax rates...
These are incontrovertible facts; you cannot make any argument against them...it's the way reality works for the human species...
Brian Casey| 11.26.08 @ 10:18AM
I'm afraid D.K. Is a product of public education and has been watching just a bit too much TV. Since when has the government been providing us with gas for are cars, and for as long as I can remember schools have been asking for more money,when do we start benefiting from what we've given. I could go on but what the hec.The balls in Obamas court now.
Gazinya| 11.26.08 @ 12:15PM
I enjoy history. I enjoyed reading to two comparisons of possible economic systems that went bankrupt. The first one in the article was of a false sense that God loves communes and not individual industrious endevores. It was a blind yet unsupported belief in a religious system that nearly killed the colony.
The next is the purely humanistic approach. This perticular system seems to be the one on which we know find ourselves. We have our own aristocrates who refuse to work for the colony yet by fiat claim a part of others work. We call them polititians. A ever growing class of aristocrates are called Liberals. Liberals clutch at the bounty of others. This is a system that, like the religious system, produces lazy people and people who end up coveting the wealth of others. "You reap what you sow."
D.K. you asked where the aristocrates get all the money? Well, after havesting the best they then go back and take from those that follow the thresher trying to gleen the left overs.
Katelyn| 11.26.08 @ 12:31PM
Wonderful article! I'm printing it out to read it at Thanksgiving dinner.
Alan Brooks| 11.26.08 @ 1:50PM
It's worse than you think, DK probably went to private schools but... well...Ted Kennedy had the best education...
You can't turn a sow's ear into a silk purse.
Frank Natoli| 11.26.08 @ 4:12PM
In November 2004, I attended Sunday Mass at St. Joseph's Catholic Church in Miami Beach, the Sunday before Thanksgiving. In the middle of the Mass, there was a procession of children, dressed in costume for the occasion. Approximately 20 of the children were dressed in Indian [native American] garb. Exactly two of the children were dressed in Pilgrim garb. That was a fact. I speculate that the two "Pilgrims" were beaten and/or bribed by their parents, lest none of the children of the congregation dare dress in the hated and contemptible English settler garb. I wrote to Pastor Enrique Estrada about the peculiar ratio of Indians to Pilgrims, of course not receiving the courtesy of a reply.
Today there was a radio report of "someone" complaining about a similar Thanksgiving re-enactment. Was the complaint similar to mine? No! The complainant, today, accused the producers of the re-enactment of combining Holocaust victims [Indians] with Holocaust perpetrators [Pilgrims].
Anyone want to bet who the current complainants voted for a few weeks ago?
Alan Brooks| 11.26.08 @ 6:17PM
Write a letter to Enrique Estrada and ask him why Cortez, Pizarro, and other brutal Hispanic swines invaded Indian territory.
Best Thanksgiving would be to invite all illegal immigrants to feasts, then for dessert load them into trucks, drive them to the southern border and let them out onto Mexican territory.
Best holiday ever.
Tripp| 11.26.08 @ 8:44PM
Too bad once the "pilgrims" reached the New World they in turn practiced some of the fiercest religious persecution that would have made Caligula blush... if I sound like an Anglophile, well I admit I am an Anglican and fiercely devoted to keeping the church's traditions not too far from what Henry VIII would have had in mind. But I digress- the point is to Mr. Ferrara- I would not be so swift as to point out these radical Calvinists as examples for anything Americans should place value in, other than perhaps their hard work. But the Catholic Hapsburgs worked hard, as did the faithful Anglicans in Jamestown and Roanoke. The ones who ALSO practiced religious tolerance even while escaping religious persecution should be the ones we are thankful for giving us this terrific, free country, and not the super-zealous Puritans from the Plymouth colony.
mike| 11.27.08 @ 7:57AM
Daphne, the total tax bite from our annual income is 55% after all social security, witholding, property, gas, state sales tax etc. My wife loves her job but works 80 hours a week serving children. I have my own company and am in an industry that is getting smoked by the downturn making it almost impossible to not have severe layoffs of half of my employees after the first of the year or have to shut down the company.
CAN YOU TELL ME HOW OBAMA'S IDEA TO GIVE ME A $3000 TAX CREDIT TO HIRE NEW EMPLOYEES WILL HELP THE ONES I'LL HAVE TO LAYOFF?
Chris DeWeese| 11.27.08 @ 11:30AM
Let us all pray for Obama to see the light. I'd rather live in a successful country with more freedom see the things that Obama wants come to fruition. Hopefully he will 'change' his mind one more time....
John personal trainer austin | 11.27.08 @ 12:48PM
"He who does not work does not eat."
Good plan. The logic of that does not sit well with socialists.
Chuck E| 11.27.08 @ 1:33PM
John,
Hate to break it to you;
"He who does not work, neither shall he eat is the first principle of socialism according to Vladimir Lenin. The phrase is mentioned in his State and Revolution (1917). Through this slogan Lenin explains that in a socialist society (which Karl Marx termed "the first phase of communism") only productive individuals would be allowed access to the articles of consumption. "
http://www.nationmaster.com/encyclopedia/He-who-does-not-work,-neither-shall-he-eat
Christianity is a lot more socialist than most Americans are comfortable acknowledging.
Daphne Kenward| 11.27.08 @ 3:17PM
Speedbump.
You know what? all responsible government have a fiscal policies, and a budget policy, so you know what you have coming in and what you have going out.
Hear is the catch, if you have low tax means you have less coming in, and you have more going out, guess what, you are over spending, so if that is allowed to go on over time you create what is called a deficit.
You cannot have a balanced budget while over spending at the same time. So where do you think the government gets the money from the short fall, they have to borrow. So if you are borrowing more than what you have coming in, what do you call that? I call it being Bankrupt, others call it lending poor people money to buy homes, lending poor people money to buy homes can't bankrupt a country the size of America.
America is where it is due to lack of sensible governance, if you are in office for 8 years, one should have an idea what the expenditure for that economy is. If for example if you are spending ore than you have coming in, sensible government needs to raise taxes, to cover for the short fall. Then there is the balance of payment deficit, which America does not speak about, well I'll speak about it it is 56 Trillion dollars, and that does not enclude this financial year. In real terms America is a Bankrupt economy. America's balance of payment deficit is enough to bring down the globe. Because they print and spend, there is no control, so eventually you end up with high inflation, and slow growth, Americas gross Domestic Product for next year is approx 0.9% or 1.3% there abouts, for a country the size of the United States America has a huge problem. Europe collectively is aproximately 3.5%. You really cant balme the poor for trying to buy a house, they were paying for their homes while they had jobs. The problem is far bigger than what the Average Americans hear in the news.
Howard Veit| 11.27.08 @ 4:27PM
Let's point out that nobody would loan them money either. It was either work or starve.
Daphne Kenward| 11.27.08 @ 7:30PM
Mike.
You know what I feel it for you, it is truely a difficult time. I would look into laying off staff as difficult as it is, and re-employ them if you can and see if you would still qualify for the $3'000,
The other thing would be can you find any areas you could cut back in. Or may be job shair where one full time position becomes two part time jobs.
Mike I wish I had better advice for you, I hope that things begins to pick up for you and many others who are hard working Americans who just want to be productive in society, I hope things work out for you, God Bless.
Marc Jeric| 11.27.08 @ 8:11PM
The first 18 months of the Bush Administration were blessed by the Clinton recession deepened by the attack of 9/11. After that we had 5 years of remarkable growth due to the Bush tax cuts. Then came the Democrat majority, driven to power by the lies and propaganda of the far left, aided and abbeted by our MSM. This financial crisis and the growing recession is entirely due to Reid, Pelosi, Shumer, Frank, and Dobbs.
Chuck E| 11.27.08 @ 8:47PM
Marc,
Here's something else Republicans have been particularly good at growing:
http://zfacts.com/p/318.html
Tax cuts certainly did help, though not nearly as much as easy credit. And we're now seeing how well that worked out.
Everyone was getting rich off poor people building houses (nothing drives the economy like home construction). Problem was, we were selling stuff to people who couldn't pay for it. That's phoney sales and phoney growth - as we now see.
Some free advice; if want Republicans to win the next election stop thinking that people are stupid. When you do, you're not willing to put in the hard work winning elections requires. Instead, you think all you have to do is tell a few lies and the votes will fall into place because, you know, people are stupid.
tom| 11.27.08 @ 11:23PM
This might be a nice illustration of the evils of socialism and the remarkable efficiency of capitalism, if it were true. The Plymouth Pilgrims landed in 1620. The rocky soil in the area made it difficult to impossible to grow crops under any economic system and the economy was based on trading fur and fish until the colony was absorbed into the Massachusetts Bay Colony in 1691. The very first experiments in distributing private land started in 1627 in order to allow for grazing of the cattle which arrived that year, so "privatization" of land obviously didn't play an important role in the colony's early survival. In fact, the colony was never considered prosperous but the Pilgrims tolerated their poverty only because they were allowed to practice their faith without persecution.
Dr Risk| 11.28.08 @ 1:21AM
Alan Brooks
Yeah, Teddy Kennedy had the best education his daddy could buy. Until he got thrown out of Harvard for hiring someone to take his Spanish exam for him.
"You can look it up." ~ Casey Stengel
Daphne Kenward| 11.28.08 @ 6:27AM
I know what it's like to want things now, but the idea of borrow and spend is what has crippled the global economy.
The only thing anyone should borrow to buy is a house, and that is with 25% deposit of the total cost, that 25% deposit shows you are a responsible borrower. Buy second hand furniture till you are able to buy new, cash not credit.
If you build your house on sand do not be surprised when it slips away. People are confused by the word Conservatism. To be a Conservative means To protect values and manitain good laws and good family values. Encouraging people to be irresponsible, is not a good prinsiple.
Buying things you cannot afford, using credit, while not knowing the impact a sudden change could inflict on ones means to pay or feed ones family.
gerry| 11.29.08 @ 8:15AM
The early settlers survived because they knew the God of the Bible. It didn't take them too long to realize that they were in violation of His laws. The Bible says, "The fear of the Lord is the beginning of knowledge, but fools despise wisdom and destruction " Proverbs 1:7.
I know that this sounds corny to most people, but we better get it right real quick. The nation that follows God Prospers. "Blessed is the Nation whose God is the LORD. Psalm 33:12
Alan Brooks| 11.30.08 @ 9:55PM
I like catholicism only-- Martin Luther was a nazi and I curse Luther in his grave!
UP with the Pope, to hell with protestants, including the puritans.
Daphne kenward| 12.1.08 @ 10:56AM
Alan.
Don't forget to curse Adolph Hitler as well he was a Catholic, blessed by the pope, in all his endeavours. And George W Bush and his family for their envolvment, in monetary support.
When the masses know the power they have, they can decide not to fight, the Muslims, for the Christians, and the protestant should not fight the Catholics, for the Christians Protestants.
All have one thing in common, they are all poor and illinformed, and are being used as a tool to promote injustice worldwide.
Jeff Hatzenbeller| 2.23.09 @ 2:45PM
What's odd to me is that liberals desire to adopt much of what socialism has to offer. Yet, it was Vladimir Lenin who said, "He who does not work, neither shall he eat." Apparently this aspect to socialism isn't taken very serioiusly by American liberals who think that The Great Society measures of welfare and "economic assistance" were good ideas.
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» The Pilgrims’ Financial Crisis The Liberty Tree Lantern links to this page. Here’s an excerpt:
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キャッシング| 7.23.09 @ 5:05AM
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Dave| 3.18.10 @ 8:08AM
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This is Great! - Page 3 - G35Driver links to this page. Here’s an excerpt: